The business of transformation
As sections of the governing party become more antibusiness and antimarket, the “antitransformation” accusation has increasingly become one of the sticks with which to beat business.
It tends to be the instrument of choice of politicians such as Mineral Resources Minister Mosebenzi Zwane, who pulled out the “antitransformation” stick this week in the face of a court challenge to his new Mining Charter, on the grounds that it would do irreparable damage to the sector whose fortunes Zwane is supposed to champion.
Chances are that the ANC’s policy conference this weekend could have some of the party’s delegates urging more of the same for other sectors, potentially further denting investor confidence and economic growth — all of which makes business’s transformation intervention this week timely and crucially important.
It is the first time that organised business, across all sectors of the economy, has united behind a commitment and approach to transformation.
It is the first time, too, that organised business, represented by Business Unity SA, has explicitly recognised that not nearly enough has been done to transform the economy and has critically evaluated the policies and achievements so far — suggesting where they have gone wrong and what shifts are needed in order to deracialise SA’s economy more effectively, in a way that at the same time makes it more competitive and dynamic and creates more jobs.
Business Unity SA, which is the apex body representing sectoral bodies, chambers of commerce and other business organisations, has spent more than six months crafting what it calls a “comprehensive approach to deracialising the South African economy”.
It has the buy-in of all its members. It seeks to collaborate with the government, organised labour and other social partners to take transformation forward.
Importantly, it has defined transformation as something that must and would put SA’s economy on a higher growth trajectory, rather than as something that would act as a drag on growth. That business is taking ownership of the challenge of tackling the racial divides within the economy and within companies is significant in itself.
The government has tended to impose rules, regulations, charters and legislation on business. Business, as a result, has often adopted what Business Unity SA calls a numerical, compliance-based approach to transformation.
If businesses see themselves as agents of transformation in their own right, it could make for a much more effective and less tick-box approach.
The Business Unity SA document identifies “enabling a transformative culture within business” as one of the key enablers to deracialising the economy. The other enablers it identifies are demand-led skills development, enterprise development support and employment promotion, particularly of youth.
Business Unity SA argues that the ownership transactions done so far have largely failed to deliver meaningful control and value to black people, handing over minority equity stakes — at huge expense to companies and their existing shareholders — which do not end up conferring much influence to their black shareholders, nor much economic value.
Combine that with the fact that funding for black economic empowerment transactions is becoming more constrained, and it is surely time for a fundamental reassessment of the ownership aspect of black empowerment.
Genuinely deracialising the economy, in other words, also means restructuring the economy in ways that could only be good for growth.